Inter-State and Inter-Regional Disparities in Bank Credit and Other Financial Flows in India in the Post-Reform Period - 13/05/2019

As a backdrop to the theme of this paper, it is worthwhile to digress a while on the evolution of thinking in economic literature on the role of finance in economic development. It is generally perceived that the classical and neo-classical economic theories neglected the role of finance in the growth process. For them, the growth essentially constituted an inter-play of physical quantities – labour supply, capital or saving and investment processes and technical progress. Those theories blithely ignored the role of finance also because “they ignored altogether the issues of distribution, since markets were efficient regardless of the distribution of income.” (Stiglitz 2000:16). In the same vein, even the most Keynesian of all, Joan Robinson (1952:86), had asserted: “By and large, it seems to be the case that where enterprise leads finance follows,” thus implying that finance is a secondary follow-up of the real sector growth process.

Based on the data from the All-India Debt and Investment Surveys, a re-emergence of non-institutional credit agencies in the incidence of household indebtedness is found since the 1990s, especially in the rural areas, reflecting the inadequate social commitments of the institutional agencies due to their contemporary organisational deficiencies. The data, however, do not seem to capture the extent of urban distress in totality. Yet, given the general dearth of evidence on the status of household indebtedness over time, institutions like the Reserve Bank of India and the National Bank for Agriculture and Rural Development should revisit this information to resurrect their roles in strengthening credit delivery to the general population.

Policies of Economic Reforms in India Appear Antithetical to the Path of Inclusive Development: A Proposition - 01/10/2018

The economic reform measures being implemented in India now for nearly three decades can be traced to well-known Washington Consensus doctrine. Many aspects of this doctrine appear antithetical to the policies of inclusiveness pursued in India. Public policy interventions, particularly those favouring social sector development, are found as essential ingredients of " inclusive development" strategy. This requires resource mobilisation from the rich. But, marginal tax rates in India have been drastically moderated during the reform period. The most conspicuous aspect of income and asset inequalities relates to the urban sector. The data from Income tax revenue statistics bring out such growing inequalities. Property taxes covering taxes on wealth, estate and inheritance and gift constitute a ridiculously miniscule amount in India. Urban inequalities are further exemplified by explosive growth in the remunerations of company executives. Inadequate budget resources are reflected inadequate budgetary allocations for social sector development.. For want of resources the social services, essentially health and education, have badly suffered both in quality and equity. India's Inclusive Development Index (IDII) rank has been placed as low as 60 amongst 79 developing economics by World Economic Forum (WEF). The Forum recommends a more progressive tax system to help raise capital for expenditure on infrastructure, health care basic services and education, The paper also concludes that the most dominant consequence of inequality is the narrowing of the domestic market, thus the demand getting restricted to a narrower and narrower basket of goods and services".

A close examination of the recent trends in government finances suggests that the expenditure pattern of the government does not provide any assurance for the future in terms of building adequate social capital. The regressive nature of taxation policy in recent years along with reduced government spending has put additional burden on out-of-pocket expenditure of individuals.

The Index of Industrial Production series, the most significant macroeconomic lead indicator, was revised by the Central Statistics Office in May 2017, two years and three months after revising the National Accounts Statistics series. Even as the new IIP series is more current, growth rates of output do not match those of the NAS. This, along with the significant lag in the periodic revision of IIP, diminishes its usefulness.

Bringing attention back to the manufacturing sector and to the statistics available to understand it, this analysis presents the differences in size and rates of growth of the sector when measured using the new National Accounts Statistics series (2011-12) and the Annual Survey of Industries. Clearly, changes in methods of measuring (for instance, the shift from the establishment approach to the enterprise approach) have introduced unexplained changes into measures of the manufacturing sector

Sticking to the firm commitment to contain fiscal deficits, the reduced thrust on government spending does not seek to be countercyclical given that economic growth is falling. There is vast scope to step up collection of corporate taxes by widening the tax base through greater compliance.

Maharashtra accounts for nearly 14% of gross state domestic product (GSDP) of all states. Being one of the largest states in the country, its fiscal strength has a definite bearing on the combined finances of both central and state governments. This article aims to examine the fiscal scenario of the state of Maharashtra by examining trends in its receipts and expenditure of the recent years. In addition, we have considered the actuals for the first half (that is, April-September) of 2016-17 and compared the same with that of the corresponding period of last year.

In the context of the demonetisation of ?500 and ?1,000 notes, the issuance of currency and its different denominations are traced over time, while also tracking key macroeconomic features of India's changing economy over the decades. Further, the possible immediate and longer term economic effects of demonetisation are discussed.